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London copper fell on Thursday after minutes of a U.S. Federal Reserve meeting showed the central bank could start to scale back its commodities-friendly monetary stimulus in the next few months if the economy continued to recover.
Prices plumbed three-month lows this week, under pressure both from worries about the Fed "tapering" and by expectations of increasing supply next year.
"It's very Fed-driven at the moment," said Mark Keenan, head of commodities research for Asia at Societe Generale.
Keenan said the copper market was showing signs of short-term tightness, with spot quotes at times higher than those further out, which was helping to underpin prices.
"But certainly the general view is that increasing mine supply is weighing on the price of copper," he added.
Three-month copper on the London Metal Exchange traded down 0.1 percent at $6,988 a tonne at 0711 GMT, paring earlier losses when it sank towards three-month lows, reaching an intra-session trough of $6,950 a tonne.
Copper hit $6,910 a tonne on Tuesday, the lowest since Aug. 7.
The most traded February copper contract on the Shanghai Futures Exchange closed barely changed at 50,280 yuan ($8,300) a tonne.
Federal Reserve officials felt they could start scaling back the massive asset-purchase programme at one of their next few meetings, depending on economic growth.
Also feeding negative sentiment towards metals, activity in China's vast factory sector grew at a milder pace in November as new export orders shrank, a preliminary survey showed on Thursday, bolstering expectations the economy could lose some of its vigour in the fourth quarter.
Growing mine supply is expected to push the global market for copper into a small surplus next year.
But the availability of copper scrap would have a much larger impact on copper market fundamentals than a small surplus, the chief executive officer of Chile's Codelco , the top global producer, said this week.
Around 40 percent of global refined copper output is produced from scrap metal and a shortage of scrap has limited output at refined metal producers in China this year. Scrap supply is not expected to rise much in 2014.
The shortage has prompted manufacturers of semi-finished and finished copper products to use more refined copper, boosting demand for metal this year.
Reflecting a lack of immediately available copper, the discount for cash copper narrowed against benchmark three-month prices to $6.25 from $14.25 on Monday.
Codelco has raised the premium for 2014 term shipments to China by 41 percent to a nine-year high, sources said this week.
China imported 292,620 tonnes of refined copper in October, up 26.85 percent.
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